Calculation Of Present value of net annual cash inflow and salvage value | |||||||
Year | Particulars | Discount Factor@5% | Machine A | Machine B | |||
Cash Flow | Discounted Cash Flow | Cash Flow | Discounted Cash Flow | ||||
1 | Net Annual Cash Inflow | 0.95238 | 11150 | 10619.05 | 12750 | 12142.86 | |
2 | Net Annual Cash Inflow | 0.90703 | 11150 | 10113.38 | 12750 | 11564.63 | |
3 | Net Annual Cash Inflow | 0.86384 | 11150 | 9631.79 | 12750 | 11013.93 | |
4 | Net Annual Cash Inflow | 0.82270 | 11150 | 9173.13 | 12750 | 10489.46 | |
5 | Net Annual Cash Inflow | 0.78353 | 11150 | 8736.32 | 12750 | 9989.96 | |
5 | Salvage Value | 0.78353 | 1180 | 924.56 | 1450 | 1136.11 | |
Present Value | 49198.23 | 56336.94 | |||||
Profitability Index | |||||||
Machine A | Machine B | ||||||
a | Initial Investment | 40400 | 50950 | ||||
b | Present Value of net cash flows | 49198.23 | 56336.94 | ||||
c | Profitability Index (b/a) | 1.218 | 1.106 | ||||
Project A should be selected. |
Tailor Corp. is considering purchasing one of two new diagnostic machines. The following estimated data has...
BAK Corp. is considering purchasing one of two new diagnostic machines. Either machine would make it possible for the company to bid on jobs that it currently isn't equipped to do. Estimates regarding each machine are provided below. Machine B $181,000 8 years Machine A Original cost $77,700 Estimated life 8 years Salvage value Estimated annual cash inflows $20,500 Estimated annual cash outflows $5,070 $40,400 $10,000 Click here to view PV table. Calculate the net present value and profitability index...
BAK Corp. is considering purchasing one of two new diagnostic machines. Either machine would make it possible for the company to bid on jobs that it currently isn't equipped to do. Estimates regarding each machine are provided below. Machine B $184,000 8 years Machine A Original cost $78,000 Estimated life 8 years Salvage value Estimated annual cash inflows $19,800 Estimated annual cash outflows $4,820 $40,300 $10,160 Click here to view PV table. Calculate the net present value and profitability index...
Exercise 24-4 BAK Corp. is considering purchasing one of two new diagnostic machines. Either machine would make it possible for the company to bid on jobs that it currently isn't equipped to do. Estimates regarding each machine are provided below. Machine B Machine A Original cost $78,000 $184,000 Estimated life 8 years 8 years Salvage value 0 0 Estimated annual cash inflows $19,800 $40,300 $10,160 Estimated annual cash outflows $4,820 Click here to view PV table. Calculate the net present...
BAK Corp. is considering purchasing one of two new diagnostic
machines. Either machine would make it possible for the company to
bid on jobs that it currently isn’t equipped to do. Estimates
regarding each machine are provided below.
Machine A
Machine B
Original cost
$76,900
$186,000
Estimated life
8 years
8 years
Salvage value
0
0
Estimated annual cash inflows
$19,600
$39,800
Estimated annual cash outflows
$5,150
$10,080
Calculate the net present value and profitability index of each
machine. Assume...
BAK Corp. is considering purchasing one of two new diagnostic machines. Either machine would make it possible for the company to bid on jobs that it currently isn't equipped to do. Estimates regarding each machine are provided below Machine A $76,600 8 years Machine B $190,000 8 years Original cost Estimated life Salvage value Estimated annual cash inflows Estimated annual cash outflows $20,000 $5,140 $40,500 $10,100 Calculate the net present value and profitability index of each machine. Assume a 9%...
Blue Corp. is considering purchasing one of two new diagnostic
machines. Either machine would make it possible for the company to
bid on jobs that it currently isn’t equipped to do. Estimates
regarding each machine are provided below.
Machine A
Machine B
Original cost
$76,900
$186,000
Estimated life
8 years
8 years
Salvage value
0
0
Estimated annual cash inflows
$19,600
$39,800
Estimated annual cash outflows
$5,150
$10,080
Click here to view PV table.
Calculate the net present value and...
Ayayai Corp. is considering purchasing one of two new diagnostic machines. Either machine would make it possible for the company to bid on jobs that it currently isn’t equipped to do. Estimates regarding each machine are provided below. Machine A Machine B Original cost $74,000 $179,000 Estimated life 8 years 8 years Salvage value 0 0 Estimated annual cash inflows $19,500 $39,500 Estimated annual cash outflows $4,800 $9,800 Click here to view PV table. Calculate the net present value and...
Pina Corp. is considering purchasing one of two new diagnostic machines. Either machine would make it possible for the company to bid on jobs that it currently isn't equipped to do. Estimates regarding each machine are provided below. Machine A Machine B Original cost $76,700 $183,000 Estimated life 8 years 8 years Salvage value 0 0 Estimated annual cash inflows $20,200 $40,500 Estimated annual cash outflows $5,040 $9,870 Click here to view PV table. Calculate the net present value and...
BAK Corp. is considering purchasing one of two new diagnostic
machines. Either machine would make it possible for the company to
bid on jobs that it currently isn’t equipped to do. Estimates
regarding each machine are provided below.
Machine A
Machine B
Original cost
$76,700
$183,000
Estimated life
8 years
8 years
Salvage value
0
0
Estimated annual cash inflows
$20,200
$40,500
Estimated annual cash outflows
$5,040
$9,870
Click here to view PV table.
Calculate the net present value and...
BAK Corp. is considering purchasing one of two new diagnostic machines. Either machine would make it possible for the company to bid on jobs that it currently isn't equipped to do. Estimates regarding each machine are provided below. Machine B $179,000 8 years Machine A Original cost $74,000 Estimated life 8 years Salvage value Estimated annual cash inflows $19,500 Estimated annual cash outflows $4,800 $39,500 $9,800 Click here to view PV table. Calculate the net present value and profitability index...